Clearway Energy (NYSE: CWEN) rewarded our patience last month by restoring quarterly dividends to a rate of 31.25 cents per share. The move initially pushed the stock to a new high in the upper-20s. But it also apparently convinced some investors the big gains are done, a mistake the sellers will likely regret.
Barely a century ago, Americans enjoyed plentiful, clean and practically free drinking water. Now ensuring safe supplies and treating waste is an increasingly essential and rapidly growing $200 billion plus global market. Among the surest beneficiaries: The handful of US investor owned utilities, headlined by Conservative Holding Essential Utilities (NYSE: WTRG).
Over the last 12 months, an investment in the Russell 1000 Growth Index has outperformed an identical stake in the Russell 1000 Value Index by more than 40 percentage points. That’s not just unprecedented outperformance. It’s unsustainable: Sooner or later, either value stocks will catch up with a strong rally, or growth will fall back.
The price of oil has been steady for a while around $40 a barrel and natural gas is over $2.50 per thousand cubic foot. But some energy companies are still downsizing dividends. Origin Energy (ASX: ORG, OTC: OGFGY) is cutting its semi-annual dividend for October to 10 cents Australian. That’s haircut of roughly one-third for the Australian power producer, electricity retailer and LNG investor.
Try “googling” popular investment media for “renewable energy” stocks—odds are you’ll be bombarded by references to Tesla Inc (NSDQ: TSLA), and otherwise scores of earnings-free companies you’ve never heard of.
That description fits to a “T” the vast majority of the 88 members of the WilderHill New Energy Global Innovation Index (NEX). The index itself is up nearly 50 percent year-to-date.
In the May 23 Utility Roundup, I highlighted Southern Company’s (NYSE: SO) “secret weapon” in its odyssey to bring new nuclear construction over the finish line at the Vogtle site in Georgia: Observation of the startup and two years of operations at four facilities in China, built on the same AP1000 reactor model.
Q2 results and guidance updates are in for roughly nine in ten companies in our Utility Report Card coverage universe. And they’re in for 35 of the 40 represented in the Model Portfolios. I’ll send an Alert if the view changes for the handful left to report.
Many analysts exclusively use big data to discover major economic and stock market trends. My problem with that is if you’re always 30,000 feet up, you’ll miss a lot of what’s happening on the ground. Utilities and essential services companies touch literally every corner of the economy. Consequently, talking a walk through their results every quarter is a great way to discern big picture trends from the ground up.
Roger's favorite utilities for investors seeking superior price appreciation by taking calculated risks.
Harness the tried and true wealth-building power of rising dividends.
Nothing compounds wealth like reinvesting a rising stream of dividends.
Warning: Falling Dividends.
Roger's current take and vital statistics on more than 200 essential-services stocks.